SDL announced its preliminary results for 2006 today. The UK-based language technology and services company booked ₤94.7 million (roughly US$190 million) in revenue, up 21% over 2005. Its pre-tax profit was up 80%, indicating that SDL’s internal systems and cost controls are performing efficiently. Gross margins increased from 47% to 49%.

SDL noted 40 new enterprise installations, citing big wins at Avaya, BMC, Dell, Intel, and Salesforce.com. Cited growing acceptance of its “global information management” (GIM) messaging. CEO Mark Lancaster said that he expects to “see continued strong returns from our investment in Global Information Management, both from the services and the technology side of the business.” Looking forward, Lancaster pointed to KbTS, SDL’s machine translation technology and service offering, as a way to increase margins by flowing more content through the system.

• Challenge: We see 2 obstacles for SDL: 1) the continuing tension between its services and technology businesses and 2) “the understanding and awareness of Global Information Management,” an issue cited by Lancaster.

• Opportunity: Breaking out of low-value language services into structured authoring and a more visible role in enterprise content management would let SDL ride the wave of continued market expansion. Meanwhile, it must still push the notion that, as Lancaster put it, “language is now a major competitive differentiator in winning and retaining market-share across the globe.”